Pros and Cons of Buying Foreclosed Property

Most buyers consider buying a foreclosed property to save money. Not all bank-owned and foreclosed properties are a bargain, but many are priced at less than market value due to their condition or the lender’s need to recoup their financial losses quickly.3

The Department of Housing and Urban Development (HUD) even has homes listed at $1.4

Buying a foreclosed property can allow you to purchase a home you might not otherwise have been able to afford—perhaps one in a high-demand area or with more square footage than you'd budgeted or hoped for.

That might be where the perks end, however. Foreclosed properties are often in poor condition and require many repairs that the seller is unwilling or unable to make. Most are sold as-is. A majority of property auctions require cash to purchase the home, so you might not be able to finance the purchase via a traditional mortgage loan.5

Pros

• May be priced lower than other homes on the market

Cons

• Properties often poorly maintained or in disrepair

• Sellers often unwilling or unable to make repairs

• Previous homeowner might be able to take the home back in some cases

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